SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. 1)
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Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
DWS RREEF Real Estate Fund, Inc.
(Name of Registrants as Specified in Its Charter)
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, Esq.
and Joel L. Terwilliger, Esq.
2344 Spruce Street, Suite A
Boulder, CO 80302
(303)442-2156
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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SUSAN L. CICIORA TRUST
2344 Spruce Street, Suite A
Boulder, CO 80302
Dear Fellow Stockholder:
This letter is on behalf of the Susan L. Ciciora Trust (the "Trust"). The Trust
is the largest stockholder of DWS RREEF Real Estate Fund, Inc. (the "Fund") and
is OPPOSED to the Fund's proposal to liquidate itself and dissolve. The
accompanying proxy statement provides details of the Trust's opposition.
We urge all stockholders to vote AGAINST this bad idea.
The Fund's board of directors wants you to vote for the liquidation at a special
meeting on May 20, 2009. Their rationale is:
Over the course of the past year, due to unprecedented and intense
volatility in the real estate market and increased investor fears and
reactions related to the worldwide credit crunch, real estate closed-end
funds, in general, and the Fund, in particular, suffered substantial
declines in assets.
We believe this statement is disingenuous and misleading and should lead
stockholders to question the sincerity of board's recommendation. The Fund has
experienced an unprecedented loss far greater than any of its peers. The Fund's
failure was not simply a consequence of the "unprecedented . . . market" as the
statement suggests, but rather the combination of the market, exceptionally bad
management, exceptionally bad investment decisions and a complacent board of
directors. The blame for our loss should be placed squarely where it belongs -
on Fund management and the board. For the board to simply "call it quits" and
ask stockholders to take an additional hit is unfair and shortsighted and only
compounds the errors already made.
Here are the reasons stockholders should vote AGAINST liquidation:
1. We believe it is dumb to just throw away the Fund's valuable tax loss
carry-forwards. Liquidating the Fund means a substantial hidden asset - the
Fund's realized and unrealized tax losses - are lost, instead of being put
to good use in offsetting future gains if the Fund stays in operation.
Unless stockholders vote AGAINST the liquidation plan, the tax benefits
will be forever lost.
2. Board members recommended by the Trust can do a better job of overseeing
the Fund and watching out for stockholders, and other advisers can do a
better job of managing the Fund's assets. However, stockholders must vote
AGAINST the liquidation so that the Fund can continue operations, thus
giving the Trust's nominees the opportunity to take over the board and
management of the Fund.
3. The liquidation plan calls for potential corporate tax payments on
liquidation proceeds, meaning that stockholders may not receive full
payment for the liquidated value of their shares because Fund's management
may have failed to qualify the Fund as a regulated investment company. This
is the result of yet another costly (but entirely foreseeable and
avoidable) mistake by management which significantly and adversely impacts
stockholder value.
4. The frictional costs associated with liquidating, winding down and
dissolving the Fund are apt to be high and will be borne directly by
stockholders. Stockholders must vote AGAINST the liquidation to avoid these
unnecessary costs.
5. By what we believe is their inept oversight of the Fund, the incumbent
board members have made it abundantly clear that their interests are not
aligned with stockholders. Thus, any recommendation by this board should be
scrutinized. Not one of the board members has a significant stake in the
Fund, so no board member took the financial hit that many stockholders
took.
6. Liquidation would require redeeming all of the Fund's leverage. Leverage is
an important asset of the Fund, especially today with auction market rates
at historic lows and the market close to the bottom - potentially a perfect
opportunity for leveraged investing. Stockholders must vote AGAINST the
liquidation to preserve this important investment tool.
7. Liquidation necessarily forces arbitrary selling at a very low point in the
market. Buying the good deals in this low market seems much more
appropriate. Good buys benefit long-term stockholders for many years
because there are no taxable consequences on gains inside the Fund.
8. On April 9, 2009, the Fund issued a press release disclosing that the board
members had "opted into" a Maryland statute which purportedly limits the
voting rights of certain shareholders, adopted a "poison pill" which is
designed to reduce certain shareholder voting rights, and adopted by-law
provisions which, among other things, requires an 80% vote of the
independent board members to approve an advisory agreement for any
investment adviser affiliated with any "5% stockholder". The measures are
clearly in response to the Trust's attempts to effectuate what we believe
are positive changes for all of the Fund's stockholders. If the board
members of the Fund, as the press release states, "approved certain
measures to enhance its ability to protect the interests of stockholders
pending stockholder consideration of proposed plans of liquidation" then
why are they are making it even more difficult for the stockholders to
effect positive change? Where were the board members when the Fund was
losing very nearly all of its stockholder value and "earning"
Morningstar's(TM) rating of 1 of 5 stars for its overall, 3- and 5-year
performance history - as compared with other similarly situated specialty
real estate closed-end funds? Also, why are the board members spending
legal fees and other costs on these restrictive measures when their time
could be better spent addressing the abysmal performance of the Fund and
more efficient ways of fixing the problem?
We can do better. As explained in the accompanying proxy statement, we have been
down this road before and have the performance to prove it.
Please vote AGAINST liquidation. Sign, date, and return the enclosed [GREEN]
proxy card in the postage-prepaid envelope that is provided
Sincerely, Stewart R. Horejsi
PROXY STATEMENT IN OPPOSITION
TO
THE SOLICITATION BY THE BOARD OF DIRECTORS
OF
DWS RREEF REAL ESTATE FUND, INC.
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 20, 2009
To Our Fellow Stockholders:
The SUSAN L. CICIORA TRUST (the "Trust") is sending this proxy statement and the
enclosed GREEN proxy card to holders of shares of common stock, par value $0.01
per share, of DWS RREEF Real Estate Fund, Inc., a Maryland corporation (the
"Fund"). This proxy is not solicited by the Fund. This proxy statement relates
to the Trust's solicitation of proxies for use at the Special Meeting of
stockholders of the Fund (the "Special Meeting") scheduled to be held on
Wednesday, May 20, 2009 at 10:00 a.m., Eastern Time, and any and all
adjournments or postponements thereof.
The Special Meeting will be held at the New York Marriott East Side, 525
Lexington Avenue, New York, NY 10017. This proxy statement and the accompanying
GREEN proxy card will first be sent to Fund stockholders on or about April __,
2009.
The Fund has scheduled the following matter for a vote at the Special Meeting:
Plan of Liquidation and Dissolution (the "Plan") adopted by the Board of
Directors of the Fund (the "Board").
THE TRUST IS SOLICITING YOUR PROXY TO VOTE AGAINST THE PLAN.
REASONS FOR THIS SOLICITATION
There are several reasons for this solicitation, and all center on the premise
that the Trust believes the Fund's stockholders have lost enough value and faith
in present management such that the Plan does not provide any long-term benefit
to the stockholders:
1. The Fund should not throw away the Fund's valuable tax loss carry-forwards.
Liquidating the Fund means a substantial hidden asset - the Fund's realized
and unrealized tax losses - are lost, instead of being put to good use in
offsetting future gains if the Fund stays in operation.
2. Board members recommended by the Trust can do a better job of overseeing
the Fund and watching out for stockholders, and other advisers of the Trust
can do a better job of managing the Fund's assets.
3. The Plan calls for potential corporate tax payments on liquidation
proceeds, meaning that stockholders may not receive full payment for the
liquidated value of their shares because Fund's management may have failed
to qualify the Fund as a regulated investment company. This is the result
of yet another costly (but entirely foreseeable and avoidable) mistake by
management which significantly and adversely impacts stockholder value.
4. The frictional costs associated with liquidating, winding down and
dissolving the Fund are apt to be high and will be borne directly by
stockholders.
5. By what we believe is inept oversight of the Fund, the incumbent board
members have made it abundantly clear that their interests are not aligned
with stockholders. Thus, any recommendation by this board should be
scrutinized.
6. Liquidation would require redeeming all of the Fund's leverage, an
important asset of the Fund, especially today with auction market rates at
historic lows and the market close to the bottom - potentially a perfect
opportunity for leveraged investing.
7. Liquidation necessarily forces arbitrary selling at a very low point in the
market. Buying the good deals in this low market seems much more
appropriate.
8. On April 9, 2009, the Fund issued a press release disclosing that the board
members had "opted into" a Maryland statute which purportedly limits the
voting rights of certain shareholders, adopted a "poison pill" which is
designed to reduce certain shareholder voting rights, and adopted by-law
provisions which, among other things, requires an 80% vote of the
independent board members to approve an advisory agreement for any
investment adviser affiliated with any "5% stockholder". The measures are
clearly in response to the Trust's attempts to effectuate what we believe
are positive changes for all of the Fund's stockholders. If the board
members of the Fund, as the press release states, "approved certain
measures to enhance its ability to protect the interests of stockholders
pending stockholder consideration of proposed plans of liquidation" then
why are they are making it even more difficult for the stockholders to
effect positive change? Where were the board members when the Fund was
losing very nearly all of its stockholder value and "earning"
Morningstar's(TM) rating of 1 of 5 stars for its overall, 3- and 5-year
performance history - as compared with other similarly situated specialty
real estate closed-end funds? Also, why are the board members spending
legal fees and other costs on these restrictive measures when their time
could be better spent addressing the abysmal performance of the Fund and
more efficient ways of fixing the problem?
We believe that the Board and the Fund's current investment advisers are simply
throwing their hands up and calling it quits without exploring other solutions
for stockholders that might have more meaningful and potentially better
long-term benefits. The Trust and companies working with the Horejsi family (the
"Horejsi Entities") offer what we believe are better options for stockholders,
all of which are discussed in this proxy statement and in the accompanying
letter from the Trust's representative, Stewart R. Horejsi. After the
precipitous ride the Fund's stockholders have taken with the current advisers,
stockholders deserve a change. We believe we can offer a positive change and the
Horejsi Entities have the experience and knowledge to bring this about. To do
this, we are asking you to first vote AGAINST the Plan. If stockholders reject
the Plan, the Trust will offer proposals for the Fund that are similar to the
proposals implemented for the other closed-end funds managed by the Horejsi
Entities. Following are more details of why stockholders should vote AGAINST the
Plan.
Abysmal Performance. In the latest ratings by Morningstar(TM) (December 31,
2008), the Fund received the worst possible rating - 1 of 5 stars for its
overall, 3- and 5-year performance history - as compared with other similarly
situated specialty real estate closed-end funds. The Fund's dismal performance
is matched only by DWS RREEF REAL ESTATE FUND II, INC. ("SRO"), which is under
common management with our Fund and received the same dismal Morningstar(TM)
ratings as the Fund. There is no excuse for the extraordinarily poor performance
of the Fund. The Board's attempt to direct stockholders' attention elsewhere by
"explaining" that these losses are due to "unprecedented and intense volatility
.. . ." etc. is simply a poor attempt to escape responsibility for the Board's
own poor oversight. While the market has been negative, no other similar fund
performed as poorly as the Fund.
Better Management from the Trust. The Trust, its Board nominees, and the Horejsi
Entities have been down this road before with positive results. Previously,
Horejsi Entities have assumed control of four other closed-end funds: Boulder
Total Return Fund, Inc. ("BTF"), Boulder Growth & Income Fund, Inc. ("BIF") and
The Denali Fund Inc. ("DNY") (collectively, the "Boulder Funds") which are
managed by Horejsi Entities, and the First Opportunity Fund, Inc. ("FF"), which
is managed by an unaffiliated adviser but administered by a Horejsi Entity. When
the Lola Brown Trust took control of DNY in October, 2007, the fund was
leveraged and had an investment objective very similar to the Fund. However,
after new advisers took over management and began transitioning from DNY's
concentrated real estate portfolio beginning in October, 2007, despite the
transitioning inefficiencies, for calendar year 2008, DNY returned -24.6% on
NAV, while the Fund returned -81.9% and nearly wiped out all stockholder equity
(and its sister fund SRO returned -91.5%). Although a -24.6% return on NAV is
nothing to boast about, it eclipsed both the Fund and SRO, and also
significantly outperformed the S&P Index (-37%) and most other closed-end funds.
In fact, DNY was ranked #1 in the Lipper Closed-End Equity Fund Performance
Analysis for Real Estate Funds for the 1-year period ended December 31, 2008 AND
the 5-year period ended December 31, 2008. While the Horejsi Entities didn't
manage DNY for the full 5 year period cited by the Lipper award, the Trust
believes that the Horejsi Entities were able to effectuate management changes
that were critical to earning this distinction. Another of the Boulder Funds,
BIF, also recently ranked #1 in the Lipper Closed-End Equity Fund Performance
Analysis for Core Funds for the 1-year period ended December 31, 2008 AND the
5-year period ended December 31, 2008. BTF's total return on net asset value for
the 1-year period ended December 31, 2008 was -40%. This performance does not
guarantee future results, but we believe it stands in stark contrast to the
performance of the Fund. We believe the Horejsi Entities can roll up their
sleeves and do a much better job with the Fund.
Capital Loss Carry-Forward. Why throw away a valuable asset of the Fund? If the
Plan is approved, it would result in stockholders losing a valuable hidden asset
- the Fund's substantial tax loss carry-forwards which we estimate to be in
excess of $100 million. Moreover, the sale of assets of the Fund under the Plan
would force realization of currently unrealized loss positions which would
further increase the capital loss carry-forwards that could be used to offset
future capital gains under better investment management. With smart management,
the Fund's extensive capital loss carry-forwards and unrealized losses could be
used to enhance stockholder value by allowing the Fund to accumulate capital
gains inside the Fund without any taxable impact on stockholders (e.g., year-end
capital gains distributions which include a tax bill), thus minimizing the
overall negative tax effect on long-term stockholders. At this point, the tax
loss carry-forwards are potentially the most important asset left in the Fund.
Liquidating the Fund would add insult to injury by wiping out this important
asset.
Liquidation Forces Arbitrary Selling. Any plan of liquidation necessarily forces
arbitrary selling. This means that assets that have been unfairly beaten down
but have significant upside will be sold at a very low point in the market.
Liquidating the Fund in a horrible market like we have today is like getting a
margin call and having to sell your good assets at bargain basement prices.
Again, this Board's recommendation to liquidate in this horrible selling
environment should raise stockholders' doubt about the Board's status as
watchdog for stockholders. Buying the good deals in this low market and waiting
for the market to normalize seems much more appropriate and is more aligned with
long-term stockholder interests.
Preserving the Fund's Leverage. The Plan would require redeeming the Fund's
preferred stock or leverage. Leverage is an important asset of the Fund,
especially today with auction rates at historic lows and the market close to the
bottom - potentially a perfect opportunity for leveraged investing. If the
preferred stock is redeemed or otherwise liquidated as would be required under
the Plan, the sunk cost paid by the Fund to issue the leverage would be wasted.
Moreover, the Fund would be forced to sell assets purchased with the leverage at
a low point in the market, the opposite of the buy-low-sell-high prime directive
of investing. Also, even though the leverage amplified the Fund's losses on the
way down, if there are eventual gains on assets held by the Fund under new
management, the current use of leverage will serve to amplify these gains.
Potential Corporate Tax Liability. The Fund's current management may have failed
to qualify the Fund as a regulated investment company, meaning stockholders are
ultimately responsible for paying corporate-level taxes! According to the Fund's
preliminary and definitive proxy statements filed with the SEC on March 20 and
April 6, 2009, "there is a risk that the Fund would not qualify as a regulated
investment company for the taxable period beginning January 1, 2009 [and the
Fund] would be subject to tax at corporate rates on its taxable income for the
taxable period beginning January 1, 2009." What this means is that the value of
the stockholders' liquidated assets, if any, under the Plan would be further
reduced because the Fund would have a corporate tax liability, something that
closed-end funds normally do not incur. Who pays this corporate tax liability?
Ultimately we do, the Fund's stockholders. So, as part of the Plan, the Fund's
management has to determine what those tax liabilities may be and possibly delay
the date that liquidation proceeds are distributed to stockholders. Accordingly,
such liquidation proceeds may be reduced by the amount of the potential tax
liability. At that time, any amounts left over in this reserve account will be
distributed to the stockholders.
The Unknown Costs of Liquidation. The costs associated with the Plan are paid by
the stockholders and further erode asset value. There are certain frictional
costs associated with liquidating, winding down and dissolving a closed-end fund
that would not otherwise be incurred if the Fund remained intact (e.g., trading
fees and commissions, legal and accounting fees, administrative fees, filing
fees, and so on). These "costs and expenses" come from Fund assets, further
eroding stockholder value. Additionally, if the Plan is approved, the Fund would
be forced to sell its assets, redeem its preferred shares (leverage), and do all
this in unfavorable market conditions while at the same time paying the
potential corporate tax penalty discussed above. Simply put, "calling it quits"
is an easy (although costly) way out. We think that with some effort and better
investment management, we can turn this Fund around and bring value back to the
stockholders. That's why stockholders should vote AGAINST the Plan.
BACKGROUND TO THE SOLICITATION
The Trust is a substantial owner of the Fund's shares, holding a ___% equity
position as of the date of this proxy statement [and anticipates increasing this
position prior to the meeting]. The Trust has been an active and vocal investor
in the Fund and, on [February 5, 2009] sent a letter to the Fund and Board
proposing, among other things, termination of the Fund's investment advisers, a
new slate of directors, and better corporate governance standards and other
ideas to enhance stockholder value. Copies of the letters are attached to this
proxy statement at Exhibit 2. It appears that none of these proposals were
seriously considered by the Board; instead, the Board has decided to "call it
quits" and liquidate the Fund. Given that the Board has very little incentive to
manage the Fund due to its members' lack of any ownership, the Trust decided
that it should bring the substantial experience and skill of the Horejsi
Entities to the table and offer a better alternative to the Fund's stockholders.
The Trust and the Horejsi Entities have substantial investments in four other
closed-end mutual funds: the Boulder Funds (as defined above), which are managed
by Horejsi Entities, and FF, which is managed by an unaffiliated adviser, but
administered by a Horejsi Entity.
Mr. Horejsi, an investment consultant to the Trust, is also the portfolio
manager for Boulder Investment Advisers, LLC ("BIA") and Stewart Investment
Advisers ("SIA"), the co-advisers to the Boulder Funds. Under Mr. Horejsi's
guidance and within a year of assuming investment management of BTF, the fund
achieved the #1 ranking for year 2000, based on total return, in Lipper's
closed-end fund standard category of "Growth & Income" funds. BIA and SIA
assumed investment management for DNY in October, 2007 and similarly with BTF,
DNY was recently ranked #1 in the Lipper Closed-End Equity Fund Performance
Analysis for Real Estate Funds for the 1-year period ended December 31, 2008.
DNY was also awarded the 5-year period ended December 31, 2008; while BIA and
SIA didn't manage DNY for the full 5 year period cited by this Lipper award, the
Trust believes they were instrumental in continuing the investment performance
results that were critical to earning this distinction. BIF, also under
management with BIA and SIA, was recently ranked #1 in the Lipper Closed-End
Equity Fund Performance Analysis for Core Funds for the 1-year period ended
December 31, 2008 and the 5-year period ended December 31, 2008.
These rankings within a particular fund category may not be indicative of the
Boulder Funds' standing among equity funds overall. The rankings achieved by the
Boulder Funds do not indicate or provide any assurance that the Fund could
achieve a similar ranking if BIA, SIA or any other investment advisers
affiliated with the Horejsi Entities were the adviser to the Fund.
Finally, the Trust advocates and believes that directors who own their fund's
shares and thus have a financial stake in their fund's success will take a more
proactive role in acting as stockholder 'watchdogs' and encouraging exceptional
performance.
SUMMARY OF PROPOSAL
The following is a summary of the Plan scheduled to be voted upon at the Special
Meeting and is based upon the information provided in the Fund's definitive
proxy statement filed with the SEC on April 6, 2009 (the "Proxy Statement").
The Fund's net assets (i.e., assets attributable to common stock) have decreased
in such a substantial manner that the Board determined that continued operation
of the Fund as a stand-alone, leveraged closed-end fund is no longer viable.
Thus, the Board recommended to stockholders the Plan (as defined above). If the
Plan is approved by the stockholders, the outstanding preferred shares (i.e.,
leverage) will be redeemed, the Fund's assets sold, potential corporate tax
liabilities paid (out of stockholders' proceeds) based on the Fund potentially
failing to meet its obligations as a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code. Accordingly, if approved, the Fund's
stockholders will receive - after all costs and expenses of the Plan are paid
out of assets of the Fund - the market value for the Fund's assets at the time
of their sale shortly following approval of the Plan, less tax amounts if the
Fund fails its qualification as a RIC. Assets distributed to the Fund's
stockholders will be secondary to the holders of the Fund's preferred stock who
receive payment of the liquidation preference of their shares, plus accrued and
unpaid dividends, if any.
All of the information in this proxy statement about the Plan is based upon
information in the Proxy Statement and the Trust cannot confirm the accuracy or
completeness of the information or advise stockholders whether this information
may change.
If the Plan is defeated, the Trust does not know what action the Board will
take. We hope that they will reconsider the various corporate governance,
investment management, and other proposals that the Trust previously submitted
to the Board. These proposals are similar to proposals submitted to, and adopted
by, the previous management of DNY, which is a similar type of closed-end fund
to the Fund. If the Plan is defeated, the Trust is likely to propose that the
Board consider appointing investment advisers affiliated with the Horejsi
Entities as advisers to the Fund.
The Trust recommends that stockholders vote AGAINST the proposed Plan for the
reasons stated in the section entitled "Reasons For This Solicitation," and in
the accompanying letter from the Trust.
PROXY CARDS AND VOTING
If you have returned a proxy card sent to you by the Fund, you have the right to
revoke that proxy and vote AGAINST the Plan by signing, dating, and mailing a
later dated GREEN proxy card in the envelope provided. Stockholders also have
the option of authorizing your proxy by touch-tone telephone or through the
internet, as explained on your proxy card. If you have any questions, please
contact _______________, the Trust's proxy solicitor, at ____________.
Discretionary authority is provided in the proxy sought hereby as to other
business as may properly come before the Special Meeting of which the Trust is
not aware as of the date of this proxy statement, and matters incident to the
conduct of the Special Meeting, which discretionary authority will be exercised
in accordance with Rule 14a-4 promulgated by the SEC pursuant to the Securities
Exchange Act of 1934, as amended.
Voting, Quorum
Only stockholders of record on March 27, 2009 (the "Record Date") will be
entitled to vote at the Special Meeting. According to information contained in
the Proxy Statement, there were 15,715,596.80 shares of Common Stock and 1,140
shares of preferred shares issued and outstanding as of the Record Date.
Approval of the liquidation and dissolution of the Fund pursuant to the Plan
requires the affirmative vote of a majority of the Fund's common stock and
preferred stock outstanding, voting together as a single class. The presence at
the Special Meeting, in person or by proxy, of stockholders entitled to cast a
majority of the votes entitled to be cast at the Special Meeting shall be
necessary and sufficient to constitute a quorum for the transaction of business.
For purposes of determining the presence of a quorum for transacting business at
the Special Meeting, abstentions and broker "non-votes" will be treated as
shares that are present at the Special Meeting. Broker non-votes are proxies
from brokers or nominees when the broker or nominee has neither received
instructions from the beneficial owner or other persons entitled to vote nor has
discretionary power to vote on a particular matter. Holders of record on the
Record Date will be entitled to cast one vote on each matter for each share of
Common Stock held by them. Shares of Common Stock do not have cumulative voting
rights. The Trust recommends that stockholders vote AGAINST the Plan as proposed
in the Proxy Statement.
Stockholders are urged to forward their voting instructions promptly.
Abstentions and broker non-votes will have the effect of a "no" vote on the
Plan. A proxy which is properly executed and returned accompanied by
instructions to withhold authority to vote represents a broker "non-vote" (i.e.,
shares held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have discretionary voting power on a particular
matter). Proxies that reflect abstentions or broker non-votes will be counted as
shares that are present and entitled to vote on the matter for purposes of
determining the presence of a quorum. Under Maryland law, abstentions and broker
non-votes do not constitute a vote "for" or "against" a matter and will be
disregarded in determining "votes cast" on an issue.
Revocation of Proxies
You may revoke any proxy given in connection with the Special Meeting (whether
given to the Fund or to the Trust) at any time prior to the voting thereof at
the Special Meeting by delivering a written revocation of your proxy to the
Secretary of the Fund or with the presiding officer at the Special Meeting, by
executing and delivering a later dated proxy to the Trust or the Fund or their
solicitation agents, or by voting in person at the Special Meeting. Attendance
at the Special Meeting will not in and of itself revoke a proxy.
There is no limit on the number of times that you may revoke your proxy prior to
the Special Meeting. Only the latest dated, properly signed proxy card will be
counted.
IF YOU HAVE ALREADY SENT A PROXY CARD TO THE BOARD OF DIRECTORS OF THE FUND, YOU
MAY REVOKE THAT PROXY AND VOTE AGAINST THE PLAN BY SIGNING, DATING AND MAILING
THE ENCLOSED GREEN PROXY CARD IN THE ENVELOPE PROVIDED. A GREEN PROXY CARD THAT
IS RETURNED TO THE TRUST OR ITS AGENT WILL BE VOTED AS YOU INDICATE THEREON. IF
A GREEN PROXY CARD IS RETURNED WITHOUT A VOTE INDICATED THEREON, IT WILL BE
VOTED AGAINST THE PLAN.
INFORMATION CONCERNING THE TRUST
As of the Record Date, the Trust held _________ shares of Common Stock,
representing approximately ____% of the outstanding shares of the Fund. The
Trust is an irrevocable grantor trust domiciled in Alaska and administered and
governed in accordance with Alaska law. The Trust is an estate planning trust
established in 1998 by Susan L. Ciciora, the daughter of Stewart R. Horejsi,
primarily for the benefit of her issue, her brother John S. Horejsi, and the
Horejsi Charitable Foundation, a South Dakota non-profit corporation. The Trust
is authorized to hold property of any kind and invests primarily in marketable
securities. Stewart R. Horejsi is the father of Susan L. Ciciora and serves from
time to time as an investment advisor to the Trust. The business address of the
Trust is: c/o Alaska Trust Company, 1029 West Third Avenue, Suite 510,
Anchorage, AK 99501-1981, and the business telephone number of the Trust is
(907) 278-6775. The trustee of the Trust is Alaska Trust Company ("ATC").
Information regarding purchases of shares of Common Stock by the Trust during
the last two years is set forth on Exhibit 1 attached hereto. During that
period, the Trust has not sold any shares of the Fund.
ATC is a state-chartered public trust company organized under the laws of Alaska
which is authorized to do business as a public trust company and which
administers various individual, family, and other trusts, including among them
the Trust and other trusts associated with Mr. Horejsi's family. The business
address of ATC is 1029 West Third Avenue, Suite 510, Anchorage, AK 99501-1981.
The stockholders of ATC are Stewart West Indies Trust (98% equity ownership),
one of the Horejsi Entities, and Douglas Blattmachr (2% equity ownership). ATC,
by way of its role as the trustee of the Trust, may be deemed to control the
Trust and may be deemed to possess indirect beneficial ownership of the shares
held by the Trust. In addition, by virtue of their position as directors or
executive officers of ATC, certain persons who act in such capacity as directors
or officers of ATC may be deemed to control ATC and therefore indirectly to
control the Trust. However, none of the directors or officers of ATC, acting
alone, can vote or exercise dispositive authority over shares held by the Trust.
Accordingly, the directors and officers of ATC disclaim beneficial ownership of
the shares beneficially owned, directly or indirectly, by the Trust. As a result
of his advisory role with the Trust, Stewart R. Horejsi may be deemed to have
indirect beneficial ownership over the shares directly beneficially owned by the
Trust. However, Mr. Horejsi disclaims beneficial ownership of these shares.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of the Record Date
regarding the beneficial ownership of shares of Common Stock by (i) each
beneficial owner of more than 5% of the outstanding shares of Common Stock
(based upon information contained in filings with the SEC), (ii) the current
executive officers and directors of the Fund (based on publicly filed
information by the Fund), and (iii) all directors and executive officers as a
group.
Common Stock
Beneficially
Name and Address Position with the Fund Owned Percent
---------------- ---------------------- ----- -------
Susan L. Ciciora Trust --- ________ ______
1029 West Third Avenue,
Suite 510, Anchorage, AK 99501
Directors and Officers as a group --- --- -- [To be added]
THE SOLICITATION
Proxies will be solicited by mail and, if necessary to obtain the requisite
stockholder representation, by telephone, personal interview or by other means.
Certain officers, directors or employees of entities related to the Trust may
solicit proxies.
Banks, brokerage houses and other custodians, nominees and fiduciaries will be
requested to forward this Proxy Statement and the accompanying GREEN proxy card
to the beneficial owner of shares of Common Stock for whom they hold of record
and the Trust will reimburse them for their reasonable out-of-pocket expenses.
The expenses related to this proxy solicitation will be borne by the Trust. The
Trust estimates that the total amount of expenses to be incurred by it in this
proxy solicitation will be approximately $______. Expenses to date have been
approximately $_____.
If you have any questions concerning this proxy solicitation or the procedures
to be followed to execute and deliver a proxy, please contact _______________ at
_____________.
Dated: April __, 2009
Exhibit 1
ALL SECURITIES OF THE FUND PURCHASED OR SOLD
WITHIN THE PAST TWO YEARS BY THE TRUST
Except as disclosed in this Proxy Statement, the Trust has no interest, whether
direct or indirect, by security holdings or otherwise, in the Fund. The
following table sets forth certain information with respect to direct purchases
and dispositions of shares of Common Stock by the Trust.
SUSAN L. CICIORA TRUST
[insert table]
The total amount of funds required by the Trust to purchase the Shares as
reported above was $_________. Such funds were provided by the Trust's cash on
hand. Cash requirements for future purchases of the Shares may come from cash on
hand and/or inter-trust advances made through a Revolving Credit Loan Agreement
as previously described in the Trust's Schedule 13D filed with the SEC on March
19, 2009 and amended on March 27, 2009.
Exhibit 2
Correspondence with the Fund
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, P.C.
2344 Spruce Street, Suite A
Boulder, Colorado 80302
February 5, 2009
By Federal Express and U.S. Certified Mail
Corporate Secretary, DWS RREEF Real Estate Fund, Inc. (the "Fund")
345 Park Avenue
New York, NY 10154-0004
John Millette
c/o Deutsche Asset Management, Inc.
Two International Place
Boston, Massachusetts 02110
To the Corporate Secretary of the Fund:
Pursuant to the provisions of the Fund's by-laws and organizational documents
and other public documents filed by the Fund with the Securities and Exchange
Commission (the "SEC"), I hereby notify you on behalf of the Susan L. Ciciora
Trust (the "Trust") that, at the Fund's upcoming 2009 annual meeting of
stockholders (the "2009 Stockholders' Meeting"), the Trust intends to nominate
candidates for election as directors of the Fund and introduce certain proposals
(collectively, the "Proposals"). The Proposals conform with the notice
requirements of the Fund's most recent proxy filed with the SEC on May 28, 2008,
and the Fund's bylaws as filed with the SEC on October 28, 2002 (the "2002
Bylaws"). It appears, based on recent proxies, that the Fund may have amended
its bylaws since the 2002 Bylaws. If the bylaws have changed since the 2002
Bylaws, please provide us with a true and correct copy of the current bylaws.
Please note that the personal and other information contained herein and in the
attached exhibits is to be treated as strictly confidential.
The Proposals are as follows:
1. A proposal to terminate the Investment Management Agreement between the
Fund and Deutsche Asset Management, Inc. (the "Investment Manager") (the
"Management Agreement").
2. A proposal to terminate the Investment Advisory Agreement between the
Investment Manager and RREEF America, L.L.C. (the "Investment Adviser") (the
"Advisory Agreement").
The Investment Manager and Investment Adviser are referred to herein as the
"Managers". Justification for Proposals 1 and 2 above is simple: The Fund's
performance over the past year under the Managers has been more than appalling.
It has been one of the worst of any closed-end or open-end funds in the entire
mutual fund universe. In the latest ratings by Morningstar(TM) (December 31,
2008), SRQ received 1 of 5 stars for its overall, 3- and 5-year performance
history, as compared with other similarly situated specialty real estate
closed-end funds. There is no excuse for the extraordinarily poor performance of
SRQ. For the one-year period ending 12/31/08, SRQ had a total return on net
asset value ("NAV") of -81.9%. To nearly wipe out the entire value of a fund in
one year is unheard of, even in a market that saw the S&P 500 Index drop by 37%.
Surprisingly, the market price for SRQ has dropped even more than NAV because
the discount for the fund increased - a decline of 86.4% for the year ending
12/31/08. This loss far exceeds any other market indices for similarly situated
funds. In fact, the Fund lost more than twice the percent lost by the S&P Index.
As noted in an article published January 4, 2009, on seekingalpha.com, SRQ was
one of the "five worst performing closed-end funds in 2008". SRO, another fund
under the Managers, was also one of these infamous five worst performers and
also received the same dismal Morningstar(TM) ratings as its sister-fund, SRQ.
Having one investment manager for two of the five worst performing funds in 2008
clearly indicates that it is time for new investment management for the Fund.
Notwithstanding the above Proposals 1 and 2, the Trust encourages the Board to
terminate the Management Agreement and Advisory Agreement sooner rather than
later. The Board members have a fiduciary duty to the stockholders to make a
change, as the Managers clearly have shown that they should no longer manage the
Fund. It is the duty of the Board to save what little is left in the Fund and
embrace the changes proposed by the Trust. However, if the Board elects not to
pursue this course of action, the Trust intends to pursue the above Proposals in
a proxy contest.
3. Nominate for election by the stockholders the following nominees as
Class III directors for the Fund: Susan L. Ciciora, Richard I. Barr, and Joel W.
Looney (collectively, the "Nominees). Copies of the Nominees' resumes are
attached to this letter and contain all information required under Section 3.3
of the 2002 Bylaws.
4. A proposal recommending that the Board of Directors of the Fund (the
"Board") adopt a resolution repealing the applicability of the Maryland
Unsolicited Takeovers Act, Maryland General Corporation Law ("MGCL") ss.ss.3-801
through 805 ("MUTA") such that the Fund will no longer be subject to MUTA. MUTA
has the effect of entrenching management and diminishing stockholder influence.
Repeal of MUTA should result in maximizing Board and management accountability
to stockholders.
5. A proposal recommending that the Board amend Article 7.1 of the Fund's
bylaws (the "Bylaws") to delete the first sentence of Article 7.1, so that
authority to amend the Bylaws is not vested solely in the Board. See discussion
under Proposal 7 below.
6. A proposal recommending that the Board amend Article 3.2 of the Bylaws
to reduce the number of directors and declassify the Board consistent with the
discussion under Proposals 8 and 9 below.
7. A proposal recommending that the Board amend the Fund's charter (the
"Charter") vesting in the stockholders the power to amend or adopt the Bylaws by
the affirmative vote of a majority of all votes entitled to be cast on the
matter. The Trust believes that all stockholders benefit if they have better
access to and more influence in the Fund's governance. The Fund's Bylaws contain
important policies affecting the day-to-day management of the Fund, which the
Trust believes stockholders should have a voice in establishing. Presently the
Bylaws contain a provision which vests the authority to adopt, alter or repeal
Bylaws solely with the Board. The Trust believes that the authority to adopt,
alter or repeal Bylaws should be a shared authority between the Board and
stockholders. This permits the Board to be responsive to house-keeping and
substantive matters regarding Fund operations, while at the same time giving the
owners of the Fund the power to effect changes should they choose to do so. The
Trust also believes that when stockholders "speak" by adopting a Bylaw, their
action should not be subject to being overturned or altered by unilateral action
of a Board whose job it is to serve stockholders. The Trust believes that this
Proposal will accommodate the practicalities of managing the Fund while at the
same time protecting an important right of stockholders. This Proposal would
codify in the Charter the shared authority to make, alter or repeal Bylaws,
while at the same time making it clear that Bylaws that are adopted by
stockholders cannot be altered, repealed or otherwise circumvented without the
affirmative approval of stockholders. If approved by stockholders, the Charter
will be amended to add the following provision:
The Bylaws of the Corporation, whether adopted by the Board of Directors or
the stockholders, shall be subject to amendment, alteration or repeal, and
new Bylaws may be made, by either (a) the affirmative vote of a majority of
all the votes entitled to be cast on the matter; or (b) the Board of
Directors; provided, however, that the Board of Directors may not (i) amend
or repeal a Bylaw that allocates solely to stockholders the power to amend
or repeal such Bylaw, or (ii) amend or repeal Bylaws or make new Bylaws
that conflict with or otherwise alter in any material respect the effect of
Bylaws previously adopted by the stockholders.
8. A proposal recommending that the Board amend the Charter to set the
number of members of the Board to five. Company charters often contain
provisions that set a high upper-limit on the number of board seats, permitting
the company's board to increase or decrease the number of board seats in their
discretion, subject to this upper limit. Currently the Charter sets a lower
limit as required by MGCL and the upper limit at twelve, permitting the Board to
increase or decrease its size subject to the upper limit of twelve. Boards may
use such provisions to quickly increase or decrease their size in an effort to
dilute the voting impact of directors - such as those elected in proxy contests
- with views contrary to those of management. The Trust views the ability to
manipulate the number of members on the Board as unnecessary and ultimately
ineffective in thwarting stockholder desires. In addition, it potentially
increases Fund expenses and insulates the Board from stockholders. Common sense
suggests that if the Fund has more Board seats, the Fund (and thus stockholders)
will spend more on Board compensation. The Trust believes that, because of the
relatively narrow business focus of an investment company such as the Fund, five
Directors can adequately and efficiently fulfill their obligation to oversee the
operations of the Fund and its management and act as "watchdogs" for
stockholders. The Trust believes that the best approach is to seek a few highly
qualified individuals to fill directorships and pay them fairly. This way,
stockholders get more "bang for the buck" in their Board and don't pay
unnecessary Board expenses. If approved by stockholders, the Charter will be
amended to delete the entirety of Article VI(1) and replaced with the following
provision:
The number of directors shall be five.
9. A proposal recommending that the Board amend the Charter to de-classify
the Board and provide for the annual election of directors. The election of
directors is the primary means for stockholders to exercise influence over the
Fund and its policies. The Trust believes that classified boards have the effect
of reducing the accountability of directors to a company's stockholders. A
classified board prevents stockholders from electing all directors on an annual
basis and may discourage proxy contests in which stockholders have an
opportunity to vote for a competing slate of nominees. While classified boards
are viewed by some as increasing the long-term stability and continuity of a
board, the Trust believes that, in the case of the Fund, long-term stability and
continuity should result from the annual election of Directors, which provides
stockholders with the opportunity to evaluate Director performance, both
individually and collectively, on an annual basis. If approved by stockholders,
the Charter will be amended to deleted the entirety of Article VI(2) and
replaced with the following provision:
The directors shall be elected at each annual meeting of the stockholders
commencing in 2009, except as necessary to fill any vacancies, and each
director elected shall hold office until his or her successor is duly
elected and qualifies, or until his or her earlier resignation, death, or
removal.
10. An proposal recommending that the Board amend the Charter to provide
that the Secretary of the Fund shall call a special meeting of stockholders on
the written request of stockholders entitled to cast at least 25% of all votes
entitled to be cast at the meeting. Presently, under the Fund's Bylaws,
stockholders cannot call a special meeting unless a written request is submitted
by the holders of a majority of outstanding shares entitled to vote at the
meeting. This ownership threshold restricts a stockholder's right to call a
meeting. This Proposal would amend the Charter to reduce the percentage
ownership level from a "majority" to 25% of outstanding shares, thus making the
potential for a stockholder or group of stockholders to call a special meeting
more realistic and useful. If approved by stockholders, the Charter will be
amended with the following provision:
The Secretary of the Corporation shall call a special meeting of the
stockholders on the written request of stockholders entitled to cast at
least twenty-five percent (25%) of all the votes entitled to be cast at the
meeting.
11. A proposal recommending that the Board change the name of the Fund so
that it does not include "DWS" or reference to the DWS family of funds, or
investments in real estate or similar securities.
The Trust represents to the Fund that as of the date of this notice it is a
stockholder of record of 1,063,395 shares of the Fund's common stock (the
"Shares") which represents 6.77% of the Fund's total outstanding and issued
shares. The Trust further represents to the Fund that it intends to be present
at the Meeting to nominate the Nominees to serve as directors of the Fund, to
submit the Proposals as contained herein, and to vote its Shares accordingly
with the nominations and proposals as presented by the Trust. The Trust hereby
represents to the Fund that it intends to continue to own, through the date of
the Meeting, these Shares.
If the Fund determines that more than three Class III directors will be elected
at the 2009 Stockholders' Meeting, or the Board expands the number of available
seats on the Board, the Trust intends to nominate candidates for the additional
Board seats and will provide the Fund with the required information for any
additional nominees.
I am also writing in connection with the Schedule 13D that the Trust filed with
the SEC today (a copy of which is attached hereto). The directors of the Fund
will be asked to take a position with respect to the Proposals. As a
representative of the Fund's largest stockholder, I urge the directors to
support these proposals as they are in the best interests of all stockholders of
the Fund and introduce sound corporate governance principals.
Only 4 of the 12 members of the Board own shares of the Fund.(1) The fact
that 8 of the 12 of these incumbent directors own no shares suggests little
incentive for the current Board to work diligently toward the future success of
the Fund and its stockholders. Certainly, this lack of meaningful ownership
highlights that the incumbents do not have enough faith in the Fund's management
to warrant investing their own money with the Fund. Accordingly, the Trust
believes that the stockholders of the Fund deserve new advisers to provide a
better chance for a positive return on their investment and a more confident
outlook for the Fund's future. In this regard, we recommend that the Board
consider Boulder Investment Advisers, LLC and Stewart Investment Advisers, both
SEC registered investment advisers who advise the Boulder-based group of
closed-end funds.(2)
If the Board agrees with these Proposals, I invite you to discuss with me
at your earliest convenience how we might mutually affect a smooth and
cost-efficient implementation of the Proposals. Please contact me at in writing
at the address provided above if you have questions. Please fax a copy of any
written response to my counsel, Stephen C. Miller, Esq. at (303) 245-0420.
Sincerely,
The Susan L. Ciciora Trust
-------------------------------------------
By: Stewart R. Horejsi, its Financial Advisor
Cc: Board of Directors for the Fund
PROXY CARD
THIS PROXY IS SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS
OF DWS RREEF REAL ESTATE FUND, INC.
BY THE SUSAN L. CICIORA TRUST
Proxy for the May 20, 2009 Special Meeting of Stockholders of DWS RREEF Real
Estate Fund, Inc.
The undersigned holder of shares of Common Stock of DWS RREEF Real Estate Fund,
Inc., a Maryland corporation (the "Fund"), hereby appoints Stephen C. Miller,
Esq., Joel L. Terwilliger, Esq., and Thomas R. Stephens, Esq., each of them, as
attorneys and proxies for the undersigned, with full powers of substitution and
revocation, to represent the undersigned and to vote on behalf of the
undersigned all shares of Common Stock that the undersigned is entitled to vote
at the Special Meeting of Stockholders of the Fund to be held at the New York
Marriott East Side, 525 Lexington Avenue, New York, NY 10017, on Wednesday, May
20, 2009 at 10:00 a.m. Eastern Time, and any adjournments or postponements
thereof. The undersigned hereby acknowledges receipt of the Trust's Proxy
Statement in Opposition and hereby instructs said attorneys and proxies to vote
said shares as indicated hereon. In their discretion, the proxies are authorized
to vote upon such other business as may properly come before the Special
Meeting. A majority of the proxies present and acting at the Special Meeting in
person or by substitute (or, if only one shall be so present, than that one)
shall have and may exercise all of the power and authority of said proxies
hereunder. The undersigned hereby revokes any proxy previously given.
IMPORTANT:
Please indicate your vote by an "X" in the appropriate box below. This proxy, if
properly executed, will be voted in the manner directed by the undersigned
stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED AGAINST THE PLAN
AS PROPOSED BY THE FUND'S BOARD OF DIRECTORS.
Please refer to the Proxy Statement in Opposition for more details.
VOTE ON PROPOSAL:
1. Approving the liquidation and dissolution of DWS RREEF Real Estate FOR AGAINST ABSTAIN
Fund, Inc. (the "Fund") pursuant to a Plan of Liquidation and Dissolution of
the Fund. /___/ /___/ /___/
The Trust recommends that the stockholders vote AGAINST the Proposal.
IMPORTANT:
Please sign exactly as name appears hereon or on the proxy card previously sent
to you. When shares are held by joint tenants, both should sign. When signing as
an attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by the
President or other duly authorized officer. If a partnership or limited
liability company, please sign in partnership or limited liability company name
by authorized person.
DATE: _____________________ _______________________________
Signature(s)
-------------------------------
Title (if applicable)
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE